UBS - "Financial markets are giving out inconsistent signals. A firmer yen, stronger Treasuries and bunds, weaker Eurozone peripheral bonds and lower stocks point to increased risk aversion. But the Swiss franc is weakening while commodity currencies are stable. The major currencies are more likely still to be driven by shifts in monetary policy. The Federal Reserve is set to keep tapering, helping the dollar recover from this year's lows. The likelihood of European Central Bank easing next month has made the euro a sell on rallies now. The yen will stay range-bound until the Bank of Japan agrees to more easing in the second half of the year. The pound will struggle to make further gains against the greenback while the Bank of England refrains from raising interest rates this year. The Swiss National Bank is highly unlikely to shift its exchange rate ceiling but may match the ECB on negative interest rates if the franc were to test its 1.20 cap against the euro first. The Reserve Bank of Australia and the Bank of Canada will remain wary of domestic currency strength while the Reserve Bank of New Zealand may surprise by hiking interest rates in June but then signal a pause in its tightening cycle.